The Irish central bank’s decision to authorise Google Payment Ireland under
the second Payment Services Directive (PSD2) attracted a fair bit of comment,
some of it informed. As Finextra pointed out, this
does not grant Google with the ability to offer a full banking service
including bank accounts, but they don’t need to because with a PI licence they
can obtain API access to bank accounts under PSD2.

It’s an obvious move for Google. My good friend Simon Lelieveldt noted
in his
blog on the subject, that this makes “Google Brexit-proof and
PSD2-proof” which would be reason enough to do it, but it’s important to
understand just how disruptive this licence might be.

I wrote about this back in 2017 for Wired, pointing out that changes in
regulation “mean the tech
giants will soon be able to access customers’ bank account data” and that
companies such as Google would take this obvious step in order to gain access
to financial services infrastructure without the overheads and scrutiny that a
banking licence involves. Similarly, I’ve
commented before that it makes sense for Amazon to get such a licence, not
a banking licence because there is nothing that the banks can do to stop
Amazon from becoming a neo-bank. PSD2 means that bank customers will give
Amazon permission to access their bank accounts, at which point Amazon will
become the interface between the customer and financial services.

Hence my point just how disruptive this might be. Only last month, banks
in Spain were complaining (with some justification) that there are
considerable implications to Google, Amazon and Facebook entering the
financial services industry. This is because the introduction of PSD2 means
that these new “big tech” entrants can benefit from asymmetric regulation and
extend their appeal to consumers. The regulation is asymmetric, as
my colleague Tim Richards I discussed in our “fireside chat” last year,
because it means that tech companies can access banks’ customer data but the
banks do not get to access the tech companies’ customer data.

The impact of open banking is, of course, not limited to the tech
giants. IATA Pay
is an industry-supported initiative to develop a new payment option for
consumers when purchasing airline tickets online. It uses PSD2 to instruct
transfers direct from customer accounts and I think it might turn out to be one
of those things that economists call a “weak signal” of change?
Looking back, I think we’ll see a kind of inflexion point where major retailers
started to bypass the card networks and use open banking to go straight to the
customer account.

“Hello this is British Airways. Click here to pay by IATA Pay and get
double Avios”.

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